Giles Membrey, Managing Director of Rioja Estates Ltd. Credit: Rioja Estates

Crisis-resistant Outlet Centers

“In some cases, schemes are trading at the same or even higher sales densities than previous years and, in many cases, better than pre-pandemic, 2019 levels.”

By Giles Membrey

Outlets have shown strong resilience against the effects of the pandemic and the massive impact Covid-19 has had on the retail market in Europe. The outlet industry has also been less affected by the rise in online sales, which has impacted more traditional retail environments. Brands still believe that physical retail is an important showcase for their products, and the outlet channel has become an ever more important part of their multi-channel distribution networks. These elements taken together have led to the great performances we have recently seen reported by outlet operators. How has this all come about?

As European countries have emerged from the lockdown, the designer outlet market has bounced back quite strongly. In some cases, schemes are trading at the same or even higher sales densities than previous years and, in many cases, better than pre-pandemic, 2019 levels. There has clearly been a lot of pent-up demand for shopping given the previous months of lockdowns as people have missed the interaction and experience of physical shopping. The spend per visitor has increased significantly, which has fueled increased sales densities. In addition to the desire to return to physical shopping, people also feel safer within the outlet environment.

In most cases, outlets are open air with surface car parking, which is deemed to be safer. Most outlet operators have also incorporated a series of actions to ensure a safer shopping environment, which is easier to do at large open-air centers. People still prefer to shop physically, but while product and price used to be the most important criteria, safety has now become paramount. Being quite management-intensive by nature, outlets are agile, and centers have been able to adapt quickly to new working models, under the advice of governments and the WHO, to create “safer shopping environments”. Many operators now offer a queue management mobile app, such as “By appointment”, to enable customers to book times at participating stores and join real time virtual queues via their smartphones. Other operators have also introduced apps such as “Mapped in” to enhance in-center navigation and other online initiatives aimed at improving the visitor experience and capturing shopper feedback.

The pandemic has resulted in the expansion of omni-channel integration to increase convenience and allow more planning of visits to centers. Some outlet operators have even implemented a virtual shopping service across their portfolios, which allows customers to contact the brand stores at the centers directly via an online sales platform, thereby enabling visitors to the outlet’s branded website to shop online, explore goods, and book times for shop visits or centralized collections.

Outlet shopping also has a built-in leisure element, thereby rendering a visit to an outlet an experience in itself. They are also ideal places to spend a day out with one’s family or group of friends. After long periods of lockdown, people are now craving those sorts of experiences.

Finally, tourism, particularly international tourism, has traditionally been a very important part of the outlet visitor market; as such, recent travel restrictions have heavily impacted international tourism visits. In Europe, it is no surprise that those schemes that primarily relied on overseas or cross-border visitors have taken much longer to recover compared to those centers that are located in areas with high population densities and are less dependable on international tourism. However, operators at such outlets have had some success adjusting their marketing strategies to more local and regional catchments as well as capturing the huge increases in domestic tourism that have resulted from the recent rise in “staycations”.

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